Answer:
The amount of money created will be $1,250,000
Explanation:
In order to find the maximum amount of money that will be created in the banking system as a result of a deposit, we need to find the money multiplier.
Multiplier = 1/reserve ration = 1/0.2 = 5
The amount of money created = Multiplier *Initial deposit
Amount of money created = 5* 250,000
= 1,250,000
